THE Shanghai Equity Exchange (SEE), operator of the city’s over-the-counter (OTC) equity market, said yesterday it has received regulatory approval to launch a hi-tech board for innovative startups and plans to list the first firms by the end of this year.

    Launch of the “technology innovation” board is part of China’s efforts to build a multi-layered capital system and is aimed at easing funding shortages for small and medium sized firms in the technology and innovation sectors, the exchange said on its website.

    China has been counting on innovation and consumption to revive its slowing economy.

    The Shanghai Equity Exchange is an OTC market similar to the U.S. OTC Bulletin Board, which caters to non-public companies that lack the collateral for bank loans and do not have the scale or the motivation to join the long queue to list on the main bourses.

    It competes with a similar board in Beijing, the “New Third Board” over-the-counter market that has been favored with policy advantages over other OTC rivals.

    The new board should also allow Shanghai to better compete with the popular ChiNext small-cap growth board in Shenzhen.

    Shanghai-based business daily China Business News, quoting the SEE’s director of innovation Chen Yanyan, said more than 50 companies are already queued up to list on the Tech Innovation Board when it launches.

    China has established three layers of share trading systems in the primary Shanghai and Shenzhen stock exchanges — he main board for mature companies, the SME board for small and medium sized enterprises and another board, or ChiNext, for startups.

    However, Shanghai was widely seen as losing competitiveness due to its focus on massive listings by State-owned companies at the expense of smaller “new economy” stocks, which are mostly listed in Shenzhen.

    It has also built up a series of OTC markets where ownership in non-public firms can change hands, but until recently they were regionalized in nature, lacked clearing mechanisms or attractive firms and thus failed to attract trade. (SD-Agencies)